Sort of Helps to Explain Things

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If anyone has been eyeing the stock market recently, it has been trending downward. This despite last week being on record as the best performing week of 2023. Long ago I said I thought I saw either a correction or a crash coming, and while we began to see signs of a correction, we certainly haven't seen a crash. I still think there are some pains ahead. But of course, you can't time the markets, and occurrences such as this are not able to be predicted, even by the savviest of investors or analysts. As a result of my personal opinion, based on my own analysis and due diligence, I made the decision to move 60% of my assets into cash positions. Recently that position has adjusted a little bit to around 50% cash as I have moved into certain sectors and positions that I believe can perform well in a stressed economic climate such as we are experiencing with inflation, and a potential recession ahead.  My sentiments are not out of line with other investor's opinions, and thus, this has been the primary reason stocks have undergone stresses. Many people are moving into cash. Not necessarily BECAUSE stocks are weak. But because cash has become so valuable with yields running up into 500 basis points. It's a natural move for most people to want to preserve capital, and if you can earn 500 basis points with zero risk, or very little risk, that's simply a move most investor's will want to make. Enter Warren Buffet. The Oracle of Omaha, who's company, Berkshire Hathaway, just reported a 40% jump in operating earnings and a record pile of cash worth $157 billion. Why so much cash? Why not just invest it into more opportunities? Because the cash is so valuable right now. With cash, Berkshire Hathaway can earn $7.8 billion a year for doing absolutely nothing but holding onto their money. In fact, the amount of money corporations and individual investors is holding right now is astronomical. Why is this important? Because there's one thing these businesses and wealthy investors will not do, and that is to not seek future opportunities to make even more on their money. In other words, all this cash will eventually go somewhere. And where will it go? Into the stock market. If you think about it, what does the stock market always do after a correction or a crash? It usually returns higher than where it left off. The markets are going down now not necessarily due to stresses on profits and revenue. They are going down because cash is at a premium. When yields run lower in the future, and they will, that cash will return to the markets, and anyone participating in that market upswing when all that cash is reinvested, will see massive gains in their portfolios. If for no other reason, seeing that one of the most successful businessmen and investor's of our lifetime is making cash king right now, it says my decision to hold a heavier cash position is also the right decision.